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Leo R. Beus / 002687 / [email protected] Scot C. Stirling / 005757 / [email protected] Steven E. Weinberger / 015349 / [email protected] Kevin Breger / 021004 / [email protected] Attorneys for Individual Plaintiffs and Trustee STEVE BROWN & ASSOCIATES, LLC 1440 EAST MISSOURI, STE. 185 PHOENIX, ARIZONA 85014-2412 TELEPHONE (602) 264-9224 Steven J. Brown / 010792 / [email protected] Co-Counsel for Trustee

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA DIANE MANN, as Trustee for the Estate of LeapSource, Inc., CHRISTINE V. KIRK, et al., Plaintiffs, vs. Case No.: CIV-02-2099-PHX-RCB PLAINTIFFS' RESPONSE TO GTCR DEFENDANTS' MOTION FOR SUMMARY JUDGMENT ON JOINT VENTURE-RELATED CLAIMS (Assigned to the Honorable Robert C. Broomfield (Oral Argument Requested)

17 GTCR GOLDER RAUNER, L.L.C., et al., 18 19 20 21 22 23 24 25 vs. LEAPSOURCE, INC., et al., Counterdefendants. Defendants, MICHAEL MAKINGS, Counterclaimant,

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TABLE OF CONTENTS 1 2 3 4 5 6 7 V. 8 VI. 9 VII. 10 VIII. TERMS OF THE JOINT VENTURE. ........................................................................ 11 11 IX. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 XV. XI. XII. X. PLAINTIFFS' RELIANCE ON GTCR'S JOINT VENTURE AGREEMENT............................................................................................................. 14 GTCR SHOULD BE ESTOPPED FROM DENYING THE EXISTENCE OF THE JOINT VENTURE WITH PLAINTIFFS. ............................. 15 THE EQUAL RIGHT OF CONTROL........................................................................ 16 SHARING IN PROFITS AND LOSSES. ................................................................... 19 THE INTENT OF THE PARTIES. ............................................................................... 9 ARIZONA JOINT VENTURE LAW............................................................................ 9 THE KIRK-GTCR JOINT VENTURE. ........................................................................ 7 IV. I. II. III. Page FACTUAL BACKGROUND........................................................................................ 2 RULE 56 STANDARD. ................................................................................................ 5 SUMMARY JUDGMENT INAPPROPRIATE WHEN INTENT IS AN ISSUE. ........................................................................................................................... 6 THE EXISTENCE OF A JOINT VENTURE MUST BE DECIDED ON THE FACTS OF EACH CASE. .................................................................................... 7

XIII. THE "DEFINITIVE" LEGAL AGREEMENTS ACCORDING TO GTCR........................................................................................................................... 20 A. B. C. D. The Joint Venture Did Not End When LeapSource Was Created.................... 20 The Parol Evidence Rule And Integrated Document Questions. ..................... 24 Integration And Ambiguity. .............................................................................. 25 Any Integration Clause Ambiguity Must Be Construed Against Defendants And Parol Evidence Is Admissible To Resolve The Ambiguity. ........................................................................................................ 26 Parol Evidence Cannot Resolve Any Ambiguity By Summary Judgment........................................................................................................... 27

E.

XIV. Plaintiffs' Promissory Estoppel Claim. ....................................................................... 28 Because The Joint Venture Claim Survives, So Does Count 22. ................................ 30

XVI. CONCLUSION............................................................................................................ 30 i

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Cases

TABLE OF AUTHORITIES Page

Air Safety, Inc. v. Teachers Realty Corp., 706 N.E.2d 882 (Ill. 1999) ................................... 28 Allison v. Dilsaver, 387 S.W.2d 206 (Mo. App. 1965) .......................................................... 20 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505 (1986).................................. 6 Arizona v. Maricopa County Medical Society, 457 U.S. 332, 102 S. Ct. 2466, 73 L. Ed. 2d 48 (1982) .......................................................................................................... 6 Armstrong Paint & Varnish Works v. Continental Can Co., 301 Ill. 102, 133 N.E.2d 711 (1921)............................................................................................................... 25 Box v. A & P Tea Co., 772 F. 2d 1372 (7th Cir.)...................................................................... 7 Celotex Corp. v. Catretti, 477 U.S. 317, 106 S. Ct. 2548 (1986) ............................................. 6 Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 112 S. Ct. 2072 (1992) ........................................................................................................................... 6 Ellingson v. Sloan, 22 Ariz. App. 383, 527 P.2d 1100 (1974) ..................... 7, 9, 17, 18, 20, 21 Enos v. Picacho Gold Mining Co., 56 Cal. App. 2d 765, 133 P.2d 663 (1943)..................... 22 Freedman v. Wolfswinkel, 19 Ariz. App. 307, 506 P.2d 1092 (1973).................................... 23 Hardin v. Pitney-Bowes, Inc., 451 U.S. 1008, 101 S. Ct. 2345 (1981) .................................... 7 Helfenbein v. Barae Investment Co., 19 Ariz. App. 436, 508 P. 2d 101 (1973) ................ 9, 14 Holmes v. Lerner, 74 Cal. App. 4th 442, 88 Cal. Rptr. 2d 130 (1999)....................... 19, 23, 24 In re Simpson, 222 F. Supp. 904 (D.C.N.C. 1963) ................................................................. 20 Kovacik v. Reed, 49 Cal. 2d 166, 315 P.2d 314 (1957) .......................................................... 20 Latimer v. Piper, 261 Mich. 123, 246 N.W. 65 (1933) .......................................................... 22 Mendelsohn v. Leather Mfg. Corp., 326 Mass. 226, 93 N.E.2d 537 (1950) .......................... 22 Muccilli v. Huff's Boys' Store, Inc., 12 Ariz. App. 584, 473 P.2d 786 (1970)................. 16, 22

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Quake Const., Inc. v. American Airlines, Inc., 141 Ill. 2d 281, 565 N.E.2d 990 (1990) .................................................................................................................................. 28 Ricke v. Ricke, 83 Ill. App. 3d 1115, 405 N.E.2d 351 (1899) ................................................ 27

3 Sparks v. Republic Nat. Life Ins. Co., 132 Ariz. 529, 647 P.2d 1127 (1982) ......................... 17 4 State v. Ashton Co., 4 Ariz. App. 599, 422 P.2d 727 (1967) .................................................... 7 5 Tate v. Ballard, 243 Minn. 353, 68 N.W.2d 261 (1954) ........................................................ 22 6 Walker v. KFC Corp., 728 F. 2d 1215 (9th. Cir. 1984) .......................................................... 31 7 West v. Soto, 85 Ariz. 255, 336 P. 2d 153 (1959)..................................................................... 9 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
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WMW Machinery, Inc. v. Werkzeugmaschinenhandle GmbH IM Aufbau, 960 F. Supp 734 (S.D.N.Y. 1997).................................................................................................. 22

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Plaintiffs submit the following Memorandum in response to the GTCR Defendants' 1 2 3 4 5 6 7 8 9 10 In fact, GTCR solicited the plaintiffs to join with GTCR as co-owners of a new 11 12 13 14 15 16 17 18 19 20 oral promises and representations by GTCR to the plaintiffs, because GTCR would not sign 21 any written funding agreements until after the plaintiffs had resigned from Arthur Andersen. 22 23 24 25 In any case, there are many disputed issues of material fact for trial concerning the formation of the joint venture between GTCR and plaintiffs, and plaintiffs are entitled to all reasonable inferences from those disputed facts.
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Motion For Summary Judgment On Joint Venture-Related Claims (the "Motion"). In their Motion, the GTCR defendants (including Bruce Rauner and Joseph Nolan, hereafter collectively referred to as "GTCR") have argued that the joint venture referenced in the Fourth Amended Complaint did not exist, that the terms of the joint venture were nothing more than negotiations between the parties, and ­ most incredibly ­ that the Individual Plaintiffs' agreement to leave lucrative partnership and other highly-compensated positions at Arthur Andersen in reliance upon the promises and representations made to them by GTCR was merely an invitation to continue those negotiations. That is nonsense.

business venture for profit, and the plaintiffs agreed to do so when they agreed to resign from their positions with Arthur Andersen. When that happened ­ the Fourth Amended

Complaint alleges and plaintiffs have testified that their agreement to pursue the new venture with GTCR was communicated to GTCR on August 30, 1999, but certainly no later than when the plaintiffs actually resigned their positions with Arthur Andersen on September 14, 1999 ­ a joint venture was created according to the terms outlined in the interrogatory answers and deposition testimony of the plaintiffs. Much of the evidence surrounding the formation of the new business venture concerns

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MEMORANDUM OF POINTS AND AUTHORITIES FACTUAL BACKGROUND. In September 1998, Christine Kirk was approached by Joe Nolan of GTCR, who solicited Kirk to partner with GTCR in forming a new business process outsourcing (BPO) financial and accounting firm to be funded by GTCR and managed by Kirk. Plaintiffs' Statement of Facts in Support of Plaintiffs' Response to GTCR Defendants' Motion for Summary Judgment (hereinafter "SOF") ¶ 42. During the preceding several years, Kirk and others had grown the BPO accounting services division of Arthur Andersen ("Andersen") to

9 10 11 12 13 14 15 16 17 18 These promises and representations formed the basis of a joint venture agreement between 19 20 21 22 23 24 25
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become one of Andersen's most profitable divisions, providing quality-outsourcing services to Andersen clients ­ including Fortune 100 companies such as General Motors. SOF ¶ 43. GTCR is a Chicago based venture capital company. SOF ¶ 44. GTCR claims to have a track record of building partnerships with exceptional executives to form leading companies, supported by GTCR's financial resources ­ holding itself out to the world as
"Partners With Management In Private Equity." SOF ¶¶ 45, 139-145.

During the course of the following year, GTCR made a number of promises and representations to Kirk, Hartmann, McCollum and through them to the other plaintiffs.

GTCR and the plaintiffs. These terms included, among other things, promises: that Chris Kirk would be permitted to assemble a management team to implement the business plan and manage the new venture, SOF ¶ 57; a new company would be formed to provide outsourcing services, SOF ¶¶ 61, 66; GTCR was prepared to commit $50 to $100 million to help build the venture, SOF ¶¶ 49, 70; the new venture would need to hire and train scores of

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employees before outsourcing contracts were signed, SOF ¶ 58; GTCR would not financially abandon the new venture and would stick by the new venture even during bad times in a way that other venture capital firms would not, SOF ¶¶ 54, 74; members of the management team would have an ownership interest in the new venture, SOF ¶ 61; the new venture would have to be equipped to provide the same level and depth of outsourcing services that Andersen provided to its clients, SOF ¶ 59; GTCR would indemnify the management team against the

7 8 9 10 11 12 13 14 15 16 There were numerous other terms of the joint venture. SOF ¶¶ 66-79, 81-89, 110, 113, 11617 18 19 20 21 22 23 24 25
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costs of any action that might be taken by Andersen as a result of the management team's departure from Andersen, SOF ¶¶ 64, 73, 75; GTCR would make Kirk whole with respect to any bonus distributions withheld by Andersen and would pay her severance if she were terminated without cause, SOF ¶ 67; GTCR would make Hartmann whole with respect to any compensation she would forgo as a result of leaving Andersen and would pay her severance if she were terminated without cause, SOF ¶¶ 68, 75; and, GTCR would make McCollum whole on any earned but unpaid bonus she would have received had she stayed at Andersen and would pay her severance if she were terminated without cause, SOF ¶¶ 69, 75.

124, 136-154. On August 30, 1999, Kirk notified Nolan that, in reliance on the representations and promises made by GTCR, she along with Kim Hartmann and Julie McCollum, would leave Andersen and form the new BPO joint venture with GTCR. The plaintiffs believe that the joint venture was created at that time. SOF ¶¶ 80, 90, 94, 98, 110, 114, 120. Other members of the joint venture, including Walker, Powers, Scott, and Gupta likewise indicated their

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intention to become members of the joint venture SOF ¶¶ 83, 85, 86, 87, 88, 89, 102, 104, 106, 108, 114, 120. In early September, Kirk demanded additional assurances from Nolan about GTCR's commitment to funding the new BPO firm, and was assured that GTCR was "fully committed" to funding $65 million and if things were going well they would fund $100 million. SOF ¶ 118.

7 8 9 10 11 12 13 14 15 16 105, 107, 109. In those circumstances, we expect that a jury will reasonably conclude that 17 18 19 20 21 22 23 24 25
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In reliance upon the representations and promises made by GTCR Kirk, Hartman, McCollum, Walker, Powers, Scott and Gupta left their positions at Andersen and began work on the new joint venture with GTCR. SOF ¶¶ 80, 90, 91, 94, 98, 102, 104, 106, 108, 111. None of these people would have resigned their positions at Andersen if they did not believe they had an agreement on the terms promised by GTCR, including a financial commitment from GTCR to fund the joint venture. SOF ¶¶ 90, 94, 98, 102, 104, 106, 108. The plaintiffs were also told that they had to resign from Andersen before GTCR would sign any written documentation committing funding to the new business venture. SOF ¶¶ 91, 95, 99, 103,

GTCR, Joe Nolan, and Bruce Rauner knew and expected that the plaintiffs would rely on their promises and representations concerning their commitment to the new venture. SOF ¶¶ 92, 96, 100. In reliance upon GTCR's representations and promises, a new corporation was also formed to provide BPO services to clients. This corporation was originally known as Kirkco, Inc. The name of the corporation thereafter changed to Leap, Inc. and then to LeapSource, Inc. SOF ¶¶ 62, 66, 111, 120, 125. This corporation was a separate entity from

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the already existing joint venture. SOF ¶¶ 82, 121, 122. A number of written agreements were entered into between Leap, Inc. and the individual Plaintiffs; between Kirkco, Inc. and GTCR; and between GTCR, Kirkco and Christine Kirk, respectively. SOF ¶ 126, 135. These written agreements were all entered into after the formation of the joint venture and after the plaintiff's had resigned from Andersen. SOF ¶¶ 80, 83, 95, 86, 98, 88, 89, 110, 126135.

7 8 9 10 11 12 13 14 15 16 transferring assets, and driving the company into bankruptcy with the assistance of their hand 17 18 19 20 21 22 23 24 25
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GTCR, Nolan, and Rauner also knew that, once the Plaintiffs had resigned from Andersen, it was very likely that Andersen would file a lawsuit against them, and that it would be difficult for the Plaintiffs to find employment in any Big 5 accounting firm if GTCR did not honor its commitments to the joint venture. SOF ¶¶ 93, 97, 101. During the next fifteen to eighteen months, GTCR did exactly what it said it would never do ­ it financially deserted the joint venture and abruptly cut off funding to LeapSource. GTCR also embarked on a campaign to dismantle and destroy the joint venture and LeapSource by firing all of the plaintiffs, laying off the sales force, fraudulently

picked "Chief Restructuring Officer," David Eaton ­ who was also an attorney at Kirkland & Ellis, which had represented GTCR for many years prior to the formation of this new venture. II. RULE 56 STANDARD. The moving party on a summary judgment motion has the burden of demonstrating to the Court that there is "no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Federal Rules of Civil Procedure ("FRCP") Rule

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56(c). Rule 56 must be construed "with due regard ... for the rights of persons asserting claims and defenses that are adequately based in fact to have those claims and defenses tried to a jury ...." Celotex Corp. v. Catretti, 477 U.S. 317, 106 S. Ct. 2548, 2555 (1986). Summary judgment is a drastic remedy and should be granted with the utmost caution. As the Supreme Court stated in Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 2513-2514 (1986), "Neither do we suggest that the trial courts should act other than with

7 8 9 10 11 12 13 14 15 16 III. 17 As the Seventh Circuit has stated, "[a]s a general rule, questions of motive and intent 18 19 20 21 22 23 24 25
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caution in granting summary judgment ...." The Court must view the evidence presented in the light most favorable to the responding party. "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor, Anderson, Id., at 255. The Court should also be mindful that the respondent's version of any disputed issue of fact is presumed correct. Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 456, 112 S. Ct. 2072 (1992); Arizona v. Maricopa County Medical Society, 457 U.S. 332, 339, 102 S. Ct. 2466, 2470, 73 L. Ed. 2d 48 (1982). SUMMARY JUDGMENT INAPPROPRIATE WHEN INTENT IS AN ISSUE.

are inappropriate for summary judgment. Box v. A & P Tea Co., 772 F. 2d 1372, 1378 (7th Cir.), cert. denied, 478 U.S. 1010, 106 S. Ct. 3311 (1986) (citation omitted). As Justice Rehnquist said in his dissent in Hardin v. Pitney-Bowes, Inc., 451 U.S. 1008, 101 S. Ct. 2345 (1981), "[i]t has long been established that it is inappropriate to resolve issues of credibility, motive, and intent on motions for summary judgment. It is equally clear that where such issues are presented, the submission of affidavits or depositions is insufficient to support a

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motion for summary judgment. Where the intent of the parties to a contract needs to be ascertained to determine their respective rights and obligations, summary judgment is particularly inappropriate. State v. Ashton Co., 4 Ariz. App. 599, 602, 422 P.2d 727 (1967). IV. THE EXISTENCE OF A JOINT VENTURE MUST BE DECIDED ON THE FACTS OF EACH CASE. Whether a joint venture exists is a question that must be resolved on the facts of each case. Ellingson v. Sloan, 22 Ariz. App. 383, 387, 527 P.2d 1100 (1974). Notwithstanding the selective citations to the record by GTCR in its Motion, the complete record discloses that the parties did, in fact, form a joint venture, pursuant to which the plaintiffs set about building an industry leading business process outsourcing ("BPO") company specializing in finance and accounting. There are numerous genuinely disputed issues of material fact concerning the circumstances surrounding the formation of the joint venture, as well as the

13 14 15 16 17 18 19 20 21 22 23 In support of these claims, GTCR spends considerable effort belaboring the fact that 24 25 there are no documents that use the term "joint venture," and that none of the plaintiffs used 7 rights and obligations of the parties to the joint venture and to each other, which are inappropriate for summary judgment and are proper for submission to a jury. V. THE KIRK-GTCR JOINT VENTURE. GTCR argues that the plaintiffs' joint venture claim is refuted by their own testimony, which is supposed to negate three elements GTCR describes ­ inaccurately ­ as necessary for the formation of a joint venture: "(1) the parties never intended to associate as joint venturers, (2) the parties never agreed to an equal right of control, and (3) the parties never agreed to participate in profits and losses." GTCR Motion for Summary Judgment, p. 16, ll. 12-15.

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the term "joint venture" or told others of their intent to enter into a "joint venture" with the GTCR defendants. GTCR's Motion cites no legal authority for the proposition that there is any requirement of a writing or use of the term "joint venture," because there is no such authority. In fact, far from requiring the use of the term "joint venture" or "partner" (and the record is filled with references to "partners" and "partnership" by GTCR), the law does not even require that the parties intend to form a partnership. All that is required for the

7 8 9 10 11 12 13 14 15 16 when the plaintiffs agreed to leave their positions at Andersen and to become co-owners with 17 18 19 20 21 22 23 24 25
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formation of a partnership ­ and a joint venture is only a type of partnership ­ is the association of two or more persons as co-owners of a business for profit, whether or not the persons intend to form a partnership. A.R.S. § 29-1012(A). The GTCR Motion relies very heavily on deposition testimony and other evidence that amounts to nothing more than an elaborately constructed straw man. The plaintiffs have never claimed that the parties did anything more than the law requires for the formation of a partnership. The "Kirk-GTCR Joint Venture" described in the pleadings is a term of

convenience to describe the legal relationship that was created on or about August 30, 1999,

GTCR of a new business venture for profit, prior to the formation of the corporation that was subsequently created to deliver BPO services to clients, and in reliance upon the promises and representations made by GTCR to the plaintiffs to induce them to become partners with GTCR in the new business venture. The court in Bank of St. Louis v. Morrissey, 597 F. 2d 1131, 1136 (8th Cir. 1979), held that the use of the words "joint venture" in testimony is not necessary to the finding of a joint venture.

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VI.

ARIZONA JOINT VENTURE LAW. Under Ellingson, 22 Ariz. App. at 386, decided under the original version of the

Uniform Partnership Act, there were five specific elements that must be present to establish a joint venture. Those are "(1) a contract, (2) a common purpose, (3) a community of interest, (4) an equal right of control and (5) participation in both profits and losses." As will be shown in this response, each of these elements ­ properly understood ­ was present in the relationship formed between plaintiffs and GTCR in 1999.

8 9 10 11 12 13 14 15 16 17 18 venture. However, that is not the issue the Court must decide, as the Uniform Partnership 19 20 21 22 23 24 25
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The formation of a joint venture agreement may be either express or implied. West v. Soto, 85 Ariz. 255, 336 P. 2d 153 (1959). The intent of the parties to associate themselves in a particular venture may be inferred from their conduct. Helfenbein v. Barae Investment Co., 19 Ariz. App. 436, 439, 508 P. 2d 101 (1973). The facts and the reasonable inferences to be drawn from the facts in this case support the plaintiffs' claim that there was an agreement between plaintiffs and the GTCR defendants, made between August 30 and September 14, 1999, to create a joint venture. VII. THE INTENT OF THE PARTIES. The defendants' first argument is that the parties did not intend to form a joint

Act does not even require an intent to form a joint venture: Except as otherwise provided in subsections B and C, the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership.

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A.R.S. § 29-1012(A) (emphasis added). Therefore, it does not matter whether the parties ever used the term "joint venture" in their discussions with each other or with anybody else. What matters is that the parties agreed to carry on as co-owners a business for profit. Several plaintiffs testified to the existence of a joint venture between themselves and GTCR. · Christine Kirk testified that the original parties to the joint venture were herself and GTCR, but that others had also joined and left the joint venture. Kirk Dep. (Ex. 1) at 360:10-14, and SOF ¶¶ 81-88. · Julie McCollum testified about her discussions with Joe Nolan of GTCR to determine if she was going to become a member of the joint venture. McCollum Dep. (Ex. 2) at 113:22-114:5, and SOF ¶¶ 81-88. · Julie McCollum further testified that besides herself and GTCR

representatives, plaintiffs Chris Kirk, Kim Hartmann, Indu Gupta, Patti Walker, and Bobby Scott were also members of the joint venture. McCollum

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Dep. (Ex. 2) at 124:19-24, and SOF ¶¶ 81-88. · Bobby Scott testified that he and the other founders of LeapSource who left Arthur Andersen to form the management team were members of the joint venture with GTCR. Scott Dep. (Ex. 3) at 92:2-7, and SOF ¶¶ 81-88. · Patti Walker testified that she had joined a joint venture with GTCR and plaintiffs Chris Kirk, Julie McCollum, Kim Hartmann, Indu Gupta, and Bobby Scott. Walker Dep. (Ex. 4) at 21:14-19, and SOF ¶¶ 81-88.

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·

Kim Hartmann testified that the members of the joint venture were herself, GTCR, Chris Kirk, Julie McCollum and the other plaintiffs in this case except for Tom Gilman. Hartmann Dep. (Ex. 5) at 298:15-299:1, and SOF ¶¶ 81-88.

·

Kelly Powers-Weekes testified that the members of the joint venture included GTCR and the founders including herself, Chris Kirk, Julie McCollum, Kim

6 7 8 9 10 11 12 13 14 15 16 and the other plaintiffs to induce them to resign their positions with Arthur Andersen. GTCR 17 18 19 20 21 22 23 24 25
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Hartmann, Indu Gupta, Patti Walker and Bobbi Scott. Weekes Dep. (Ex. 6) at 119:1-15, and SOF ¶¶ 81-88. · Indu Gupta testified that she was familiar with the Kirk-GTCR joint venture referred to in the Fourth Amended Complaint. Gupta Dep. (Ex. 7) at 119:1-15, and SOF ¶¶ 81-88. VIII. TERMS OF THE JOINT VENTURE. A summary description of the terms of the "Kirk-GTCR" joint venture is found in plaintiff Christine Kirk's Responses to GTCR's First Set of Interrogatories. In response to Interrogatory No. 1, Kirk identified 18 separate commitments that GTCR proposed to Kirk

refers to Ms. Kirk's interrogatory answers in passing, but then ignores that part of the record in its Motion. The joint venture terms set forth in Kirk's interrogatory responses are as follows: "(1) that GTCR would provide the financing required to successfully establish the new venture, with the understanding that the amounts required would be in the range of $50-100 million; (2) that GTCR's commitment was a long-term commitment to the success of the new venture, and that the new venture would be supported through a start up period that was expected to take two years, until it was successfully established as a leading

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provider of BPO services, and ready to go public or to be acquired when it would be advantageous to the new venture; (3) that the new venture would be expected to lose substantial amounts of money during its start up period (operating with negative EBITDA), that GTCR understood the magnitude of the financial commitment required to support the new venture during its start up period (because GTCR actually had similar loss experiences with other start-up companies), was "well equipped" to handle such losses, and was willing to finance the new venture through that start up period; (4) that GTCR's funding commitment was not conditioned upon the new venture's losses reaching or exceeding any particular amount over the first two years; (5) that GTCR would not financially abandon the new venture, but would stick by the new venture even during bad times, in a way that other venture capital firms would not (in one meeting expressed by Rauner that, if Kirk would agree to leave Andersen and join GTCR in this new BPO joint venture, GTCR would be her "partner for life," and in another conversation with Nolan, when the possibility of obtaining financing from another firm was mentioned, that "They won't stick by you in bad times like we will"; (6) that the purpose of the new venture would be to create and develop a new BPO firm, to pursue related opportunities, and to grow the business of the new BPO firm through acquisitions, alliances, and operations, as contemplated in the business plan prepared by Chris Kirk and others, and provided to GTCR; (7) that Chris Kirk would be permitted to assemble a management team to implement the business plan and to manage the new venture, with the understanding that a qualified team of professionals and others would have to be brought into the management team to provide and to sell the outsourcing services; (8) that the new venture would need to hire and train scores of employees even before outsourcing contracts were signed (with Joe Nolan suggesting that the appropriate number of people to bring on board at the outset would be 100); (9) that the new venture would have to be equipped to provide the same level and depth of outsourcing services that Andersen provided to its clients; (10) that the management team put together by Chris Kirk would be permitted to manage the new venture (also expressed in other words that GTCR did not get involved in management and would adopt a "hands off" policy toward the management of the new venture); (11) that the members of the management team would have an ownership interest in the new venture, with common stock in a new entity to be formed pursuant to the new

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venture divided equally between GTCR and the management team, and with GTCR receiving preferred stock in return for its financial investment; (12) that the members of the management team would be assured of compensation at levels comparable to the compensation that they had been receiving at Andersen (and Chris Kirk, Kim Hartmann, and Julie McCollum specifically discussed their individual compensation as described below); (13) that GTCR would indemnify the management team against the costs of any action that might be taken by Andersen as a result of the management team's departure from Andersen; (14) that, because of the non-competition provisions in the management team's agreements with Andersen, the new venture would not be permitted to start selling outsourcing services for a period of months after their departure from Andersen, which would further extend the start up period discussed previously (when the new venture would be losing money and requiring continuing financial support from GTCR); (15) that a new company would be formed to provide outsourcing services, and would be a "standard GTCR play," intended to replicate the AnswerThink experience, which meant to start the business with a substantial number of experienced employees from Andersen so that the new venture could stake out a leading position in the BPO services industry; (16) that Kirk's $400,000 annual salary had been accepted by the GTCR's Board of Directors, that GTCR would make Kirk whole for any bonus distribution withheld by Andersen, and would pay her a one-year's severance package if she was terminated without cause; (17) that GTCR would make Hartmann whole with respect to any compensation that she expected to receive from Andersen but did not receive because she left before October 1999, up to $1 million, and that GTCR would pay Hartmann a one-year severance package equal to her annual salary of $300,000; and (18) that McCollum would be made whole on any earned but unpaid bonus she would have received had she stayed at Andersen (with the understanding that McCollum expected to receive a bonus from Andersen in the amount of $80,000), and that GTCR would provide McCollum with a one-year severance package equal to her salary of $360,000." Kirk Responses to GTCR's First Set of Interrogatories (Ex. 8), and SOF ¶¶ 49-69.

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On or about August 30, 1999 Kirk, on behalf of herself and the other "founders" who left Andersen to form the new business venture with GTCR, notified Joe Nolan of GTCR that plaintiffs had agreed among themselves to accept GTCR's proposal, and were prepared to leave Andersen to form the new business venture. Kirk Dep. (Ex. 1) at 3:1-24, SOF ¶ 89. At that moment a joint venture was created. A contract of joint venture is founded upon a mutual understanding between the

7 8 9 10 11 12 13 14 15 16 relevant facts with respect to this material issue are genuinely disputed and cannot be 17 18 19 20 21 22 23 24 25
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parties that they will associate themselves in a particular venture, and their intent to do so may be inferred by their conduct. Helfenbein, 19 Ariz. App. at 439 (note that the relevant intent is the intent to do the thing that creates the joint venture, not an intent to form a "joint venture" as such). While GTCR admits that it entered into a written contract with Christine Kirk in late September 1999, it denies being a party to any oral agreement(s) with her or any of the other plaintiffs prior to that time. The plaintiffs claim and have testified that they entered into an agreement with GTCR to form a new business venture on the terms described above. The

resolved by summary judgment. IX. PLAINTIFFS' RELIANCE ON GTCR'S JOINT VENTURE AGREEMENT. A jury will not believe that the plaintiffs left their positions and employment at Andersen without having any agreement with GTCR concerning the formation of the new business venture. The plaintiffs will testify and we believe the jury will believe that GTCR did make promises and representations to the plaintiffs before they left Andersen on September 14, 1999, and did so with the understanding and expectation that the plaintiffs

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would rely upon GTCR's promises and representations in leaving Andersen and committing themselves to the new business venture in partnership with GTCR. That is in fact what happened. See attached Affidavits of Christine Kirk, Kim Hartmann, Julie McCollum, Indu Gupta, Patti Walker, and Bobby Scott. X. GTCR SHOULD BE ESTOPPED FROM DENYING THE EXISTENCE OF THE JOINT VENTURE WITH PLAINTIFFS. The parties to the first discussions regarding the new business venture at its inception were Christine Kirk and principals of GTCR. After satisfying themselves as to the strength of the commitment of GTCR to the joint venture, plaintiffs Kim Hartmann and Julie McCollum decided to join the joint venture as well. McCollum Dep. (Ex. 2) at 109:7111:16, 113:22-114:5, and SOF ¶¶ 90-93; Hartmann Dep. (Ex. 3) at 50:6-22, 55:6-56:21, and SOF ¶¶ 98-101. After Hartmann and McCollum agreed to join with Kirk and GTCR in the

13 14 15 16 17 18 19 20 21 22 representations to Kirk, Hartmann and McCollum. SOF ¶¶ 110-120. GTCR should now be 23 24 25 estopped from denying the existence of the joint venture agreement upon which so many third parties relied. In Muccilli v. Huff's Boys' Store, Inc., 12 Ariz. App. 584, 588, 473 P.2d 15 joint venture, the remaining plaintiffs who were known as the founders also joined the group. SOF ¶¶ 102-109. At all times GTCR intended and encouraged Kirk to bring her

management team from Andersen into the joint venture. Kirk Dep. (Ex. 1) at 87:3-88:8, 113:22-114:5, and SOF ¶¶ 42-48, 136-154. When GTCR's principals asked and encouraged Christine Kirk to bring her "management team" from Andersen with her (prior to the preparation and execution of any formal agreements), they knew and understood that Julie McCollum, Kim Hartmann and other plaintiffs who were employed by Andersen would receive and rely upon their

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786 (1970) the court held that "[i]t is also a general rule that a party may, by his conduct, estop himself from denying status as a joint venturer and resulting liability. See 48 C.J.S. Joint Adventures § 14, page 868." GTCR's oral promises and representations to the plaintiffs concerning their intention to build an industry leading BPO business as partners with the management team headed by Christine Kirk, induced the reliance of Christine Kirk, Kim Hartmann, Julie McCollum, Patti

7 8 9 10 11 12 13 14 15 16 17 venture. Just as it did in its Motion to Dismiss, GTCR has completely misapprehended the 18 19 20 21 22 23 24 25 actual meaning of the "equal right of control" issue in Arizona law of joint ventures. The law does not require that the parties actually agree to share equally in the control of the joint venture's business. In Ellingson, for example, the court expressly recognized that the parties to a joint venture ­ consistent with the right of equal control ­ were free, by their agreement, to specify the responsibilities and authorities of each with respect to the joint venture: The requisite of equality in joint control does not render impossible the delegation of the duties of management to one of 16 Walker, Indu Gupta, Kelly Powers, and Bobby Scott. These individuals all resigned from their positions with Andersen in reliance upon the promises made by GTCR, and by relying and beginning the work of building the new business venture they entered into a relationship with GTCR as co-owners of a business for profit. That is the relationship described in the pleadings as the "Kirk-GTCR Joint Venture." Having solicited the plaintiffs to rely upon its promises in entering into that relationship, GTCR should be estopped from claiming that no joint venture existed between GTCR and plaintiffs. XI. THE EQUAL RIGHT OF CONTROL. GTCR claims that the parties never agreed to an "equal right of control" of the joint

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the participants in a joint venture. The rights of the parties with respect to the management and control of the enterprise may be fixed by agreement so as to effectively place control in the hands of one of the joint venturers, and, once having been fixed, may be changed by agreement.' (Footnotes omitted). 46 Am.Jur.2d, Joint Ventures, § 42 at 61 (1969). Ellingson, supra, at 387, footnote 1 (emphasis added). See also Sparks v. Republic Nat. Life Ins. Co., 132 Ariz. 529, 539-540, 647 P.2d 1127, 1137-38 (1982) (describing different roles and responsibilities of ALPHA and Republic, and concluding "There can be no doubt that the business relationship entered into by ALPHA and Republic contained all of the essential elements of a joint venture...") (emphasis added). The law does not require that the parties actually exercise equal control over the affairs of the joint venture, and they are free by their agreement to allow each of the parties to play a different role in the business venture, with more or less or no control over the

13 14 15 16 17 18 19 20 21 22 effect that either GTCR controlled the joint venture or that they themselves had no control 23 24 25 over it, GTCR Motion at 20-21, does not establish that the plaintiffs had none of the control or right of control over the joint venture under the standard established by Ellingson. See, 17 operations of the venture. Thus, the fact that (as GTCR points out in its Motion) GTCR had the right to control the board of LeapSource (the corporation formed to provide BPO services to the clients), and the fact that GTCR in fact had substantial control over the fate of the venture because of its control of the purse strings, do not preclude the finding that a joint venture existed. Moreover, GTCR again ignores the complete record in this case and merely points this Court in the direction of snippets of testimony that it claims as support for its argument. For example, the testimony cited in this portion of the GTCR Motion from plaintiffs to the

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e.g., SOF ¶¶ 57, 60, 110 (Kirk would assemble a management team to implement the business plan, which she did); SOF ¶ 124 (part of Kim Hartmann's obligation with respect to the joint venture was to help build a leading practice BPO company). GTCR also directs the Court to the Summary of Understanding ("SOU") that Christine Kirk testified was a writing that contained some of the terms of the joint venture. However, nowhere in the deposition record did Ms. Kirk claim that the SOU contained each

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 5) 22 23 24 25
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and every term of the joint venture agreement, nor all of her discussions with the principals of GTCR. Ms. Kirk's response to GTCR's Interrogatory No. 1 (cited above) also referred to the SOU as one of the documents "containing or reflecting some of the terms of the joint venture agreement." Kirk Responses to GTCR's First Set of Interrogatories (Ex. 8). As a matter of fact, the following excerpt from that response identifies several such documents: Documents containing or reflecting some of the terms of the joint venture agreement include the following: 1) 2) 3) Draft of Freedom Business Plan dated July 1999 (LS-CK1-0675 ­ 706). Freedom Business Plan dated August 1999 (GTCR 002297-2309). GTCR Golder Rauner's website as it existed during the relevant time period September 1998 to August 1999, when Chris Kirk and other Individual Plaintiffs were referred to it for information about GTCR, including its history of partnering with management teams. Promotional literature and business information provided to Chris Kirk by GTCR in 1998 and 1999, including promotional literature featuring GTCR's motto "Partners with Management and Private Equity." The specific promotional materials referred to here have not yet been specifically identified; however, all such documents in the Plaintiffs' possession have been produced. Summary of Understanding September 1999 (signed, and unsigned draft) (LS-CK1-0467 ­ 74). Letter from Joe Nolan to Chris Kirk dated May 14, 1999 (GTCR 005520-5521).

4)

6)

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Kirk Responses to GTCR's First Set of Interrogatories (Ex. 8). While Christine Kirk at her deposition could recall only the SOU as an example of one of the written documents that contained some of the terms of the joint venture, her interrogatory responses, made under oath six months earlier, provided additional detail of the joint venture terms, and are a part of the record on this Motion. XII. SHARING IN PROFITS AND LOSSES. There are several errors in GTCR's arguments with respect to this issue. First, "an

7 8 9 10 11 12 13 14 15 16 17 requirement of "participation" in profits and losses of the venture: 18 19 20 21 22 23 24 25 Appellant contends that the arrangement between the parties cannot be characterized as a joint venture because it did not provide for Sloan's participation in any losses nor for mutual control of the enterprise. We do not agree. The term `losses' is not limited to monetary losses, but includes time expenditures and out-of-pocket expenses, especially where one party in a joint venture furnishes property and the other only services. In re Simpson, 222 F. Supp. 904 (D.C.N.C. 1963); Kovacik v. Reed, 49 Cal. 2d 166, 315 P.2d 314 (1957); Allison v. Dilsaver, 387 S.W.2d 206 (Mo. App. 1965); 46 Am. Jur. 2d Joint Ventures § 13 (1969). By 19 express agreement to divide profits is not a prerequisite to prove the existence of a partnership." Holmes v. Lerner, 74 Cal. App. 4th 442, 445, 88 Cal. Rptr. 2d 130 (1999) (interpreting Uniform Partnership Act definition of partnership, and concluding that division of profits is evidence of partnership, but not a required element); see also A.R.S. § 291012(A) (current Arizona definition of partnership under Revised Uniform Partnership Act). Moreover, even under the prior version of the Uniform Partnership Act, the division of profits and losses did not require equal sharing of monetary profits and losses. Instead, the contribution of services by one or more of the parties was sufficient to satisfy the

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agreeing to an exchange of services for a share of the profits to be derived from the joint venture, the parties provided for Sloan's participation in any losses. Ellingson v. Sloan, 22 Ariz. App. 383, 386, 527 P.2d 1100, 1103 (1974) (emphasis added). Moreover, GTCR has again ignored relevant facts in its argument with respect to this issue. There were, in fact, expenses incurred by the joint venturers on behalf of the joint venture. SOF ¶ 84. It was understood by plaintiffs and GTCR that a new company would be formed to build the industry-leading BPO contemplated by the new venture. Kirk Responses

8 9 10 11 12 13 14 15 16 17 venture agreement. Those facts are sufficient to establish participation in the profits and 18 19 20 21 22 23 24 25
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to GTCR's First Set of Interrogatories (Ex. 8), and SOF ¶¶ 56, 66, 71, 124. The plaintiffs were also to have an ownership interest in the new BPO company to be created to provide services to clients. SOF ¶ 61. Moreover, the joint venture agreement also contemplated pursuing other opportunities in the future. SOF ¶ 56. As was the case in Ellingson, the plaintiffs who resigned from Arthur Andersen to join GTCR in building an industry-leading BPO generally provided services to the joint venture, although some of them also paid expenses of creating the new business venture, while GTCR committed to provide the money required to implement the terms of the joint

losses of the joint venture. XIII. THE "DEFINITIVE" LEGAL AGREEMENTS ACCORDING TO GTCR. A. The Joint Venture Did Not End When LeapSource Was Created.

Contrary to the assertions of the GTCR defendants, the "entire purpose" of the "parties' negotiations" (as GTCR describes the joint venture) was not to "create LeapSource and execute a definitive legal agreement governing its operation." Motion at 22.

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According to plaintiffs, one of the purposes of the joint venture with GTCR was to create a leading BPO services provider. Kirk Responses to GTCR's First Set of

Interrogatories (Ex. 8), and SOF ¶¶ 56, 66, 71, 124. GTCR's letter to Christine Kirk dated May 14, 1999 (Ex. 1 to Motion) specifically refers to "building a business with you," "build an exciting company," and "we welcome the opportunity to partner with you." The phrasing of this letter contemplates a long-term relationship between the parties, not one that will end

7 8 9 10 11 12 13 14 15 16 Response to that Motion: 17 18 19 20 21 22 23 24 25
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upon the formation of a corporate entity and the execution of some documents. In this part of its Motion, GTCR is returning to the argument that a joint venture and a corporation cannot co-exist. GTCR again cites WMW Machinery, Inc. v.

Werkzeugmaschinenhandle GmbH IM Aufbau, 960 F. Supp 734 (S.D.N.Y. 1997), for the proposition that incorporation of a business is fundamentally inconsistent with continuing to do business as a joint venture. This is the same argument that GTCR made in its Motion to Dismiss, and it is contrary to the weight of authority around the country, as the plaintiffs observed in their

"The fact that joint adventurers may determine to carry out the purpose of the agreement through the medium of a corporation does not change the essential nature of the relationship." Tate v. Ballard, 243 Minn. 353, 68 N.W.2d 261, 265 (1954); quoting

Donahue v. Davis, 68 So. 2d 163, 171 (Fla. 1953); see also Mendelsohn v. Leather Mfg. Corp., 326 Mass. 226, 93 N.E.2d 537 (1950); Latimer v. Piper, 261 Mich. 123, 246 N.W. 65

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(1933); Enos v. Picacho Gold Mining Co., 56 Cal. App. 2d 765, 133 P.2d 663 (1943). Arizona has not addressed the issue directly, but is likely to follow the majority rule.1 In addition to the authorities cited in their response to the GTCR Motion to Dismiss, the plaintiffs refer the Court to Holmes v. Lerner, 74 Cal. App. 4th 442, 445, 88 Cal. Rptr. 2d 130 (1999), interpreting the Uniform Partnership Act, and finding the existence of a joint venture where the parties' very first discussions about the business venture contemplated the

7 8 9 10 11 12 13 14 15 16 17 and her business consultant. Holmes heard her say `Please check Urban, for the name, 18 19 20
1

formation of a corporation: Lerner said to Holmes: "This seems like a good [thing], it's something that we both like, and isn't out there. Do you think we should start a company?" Holmes responded: "Yes, I think it's a great idea." Lerner told Holmes that they would have to do market research and determine how to have the polishes produced, and that there were many things they would have to do. Id. at 446-447 (emphasis added). The joint venturers "decided that `Urban Decay' was a good name for their concept." Id. at 446. At the same meeting at which they agreed to start a company, one of the joint venturers arranged to reserve that name for their business: "Lerner went to the telephone and called David Soward, the general partner of & Capital,

Urban Decay, to see if it's available and if it is, get it for us.'" Id. Thereafter, Ms. Holmes

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See Muccilli v. Huff's Boys' Store, Inc., 12 Ariz. App. 584, 473 P.2d 786, 791 (1970): "Appellants argue at some length that the fact that they intended to create a corporation in the future necessarily negates the existence of a joint venture. But whether or not a joint venture agreement would or would not survive an actual incorporation (which was not shown), we think it clear that a mere intention on the part of interested parties to carry out some or all aspects of the enterprise though the medium of a corporation is not inconsistent with the present existence of a joint venture." (Emphasis added.) See also Freedman v.

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contributed only the idea and services; Ms. Lerner arranged for the financing. Id. "In September of 1995, Soward signed an application for trademark registration as president of Urban Decay. In December of 1995, Urban Decay was incorporated." Id. at 448

(emphasis added). The incorporation of the very business that the joint venturers had contemplated from the beginning ­ with the knowledge and acquiescence of both, who participated in board

7 8 9 10 11 12 13 14 15 16 intent. Court Order dated September 30, 2003 at 23-24. The plaintiffs understood and 17 18 19 20 21 22 23 24 25 Wolfswinkel, 19 Ariz. App. 307, 506 P.2d 1092 (1973) (related parts of real estate development business were conducted through corporations and through a joint venture).
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meetings and other meetings and work related to the business after it was incorporated ­ was no impediment to Ms. Holmes's claim for breach of the joint venture agreement when Ms. Lerner (the "financial partner") repudiated her agreement and breached her duties to Ms. Holmes. The Court of Appeals affirmed a judgment entered upon a jury verdict for Ms. Holmes, concluding with an extended discussion that "There Was No Error in the Determination That a Partnership Was Formed." Id. at 453-457. Addressing this issue in response to GTCR's previous Motion to Dismiss, the Court noted that the survival of a joint venture post-incorporation is a question of the parties'

intended that the joint venture with GTCR would continue even after LeapSource was incorporated. Hartmann Dep. (Ex. 2) at 21:14-19, and SOF ¶¶ 46, 47, 73, 74, 123; Walker Dep. (Ex. 4) at 21:14-19, and SOF ¶ 122. As discussed above, such questions concerning the parties' intent are particularly inappropriate for summary judgment.

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B.

The Parol Evidence Rule And Integrated Document Questions.

GTCR would like for this Court to believe that the documents they refer to as collectively comprising the "definitive" legal agreements were signed by all of the parties and are equally applicable to all parties and all subjects. That is not so. The only document that was signed by each of the plaintiffs Kirk, Hartmann, McCollum, Walker, Gupta, Powers, Scott and GTCR was the Stockholders Agreement. SOF ¶ 126. This document sets out the "terms on which shareholders would buy company stock, and specified the

8 9 10 11 12 13 14 15 16 17 18 or representations by or among the parties that do not relate to "the subject matter hereof" ­ 19 20 21 22 23 24 25
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composition and control of the company's Board of Directors." GTCR's Motion at 12. As that is the only document signed by all plaintiffs and GTCR, its integration clause is the only such clause applicable to all plaintiffs, and it states: Entire Agreement. Except as otherwise expressly set forth herein, this document embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supercedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter in any way. Stockholders Agreement, Ex. 85 to Kirk Dep., Bates No. GTCR 3078-3089 (Ex. 15) at 12 (emphasis added). This integration clause is self-limiting: prior understandings, agreements

buying LeapSource stock ­ are not subject to that integration clause. As stated by the Illinois Supreme Court in the case of Armstrong Paint & Varnish Works v. Continental Can Co., 301 Ill. 102, 106, 133 N.E.2d 711 (1921), "[w]hen parties sign a memorandum expressing all the terms essential to a complete agreement they are to be protected against the doubtful veracity of the interested witnesses and the uncertain memory

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of disinterested witnesses concerning the terms of their agreement, and the only way in which they can be so protected is by holding each of them conclusively bound by the terms of the agreement as expressed in the writing." It is clear that integration clauses are limited to prior understandings, agreements or representations by or among the parties to the agreement concerning the subject of the agreement. Other representations are not integrated into the written agreement.

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C.

Integration And Ambiguity.

The integration clause that GTCR contends is applicable to every representation ever made by GTCR, Joseph Nolan and Bruce Rauner, and all of the alleged "definitive" documents is contained in the Senior Management Agreements ("SMA") and Employment Agreements signed by the Plaintiffs. The parties to these employment agreements were the plaintiffs and Kirkco or Leap, Inc. GTCR is not a party to any of these documents, and the integration clause contained in these documents are applicable only to those parties who signed these agreements. The particular integration clause in these documents reads: Complete Agreement. This agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supercede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. Kirk SMA (Ex.6 to GTCR Motion) at 17 (emphasis added), and SOF ¶ 129. The words "documents of even date herewith" do not appear in the integration clause in the SMAs of

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Hartmann and McCollum, or in the Employment Agreements of Walker, Gupta, Powers, and Scott. The integration clauses in the SMAs and Employment Agreements are limited by their terms to prior representations or agreements "among the parties" to those particular agreements, and to representations or agreements among the parties "which may have related to the subject matter hereof" ­ that is, to the terms of their employment by LeapSource.

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 351(1899) (citations omitted). 23 24 25 Assuming the existence of any ambiguity in these integration clauses and resolving them against the GTCR defendants will inevitably lead to a limitation of their applicability to 26 GTCR can only attempt to extend the reach of these integration clauses by arguing that they are ambiguous. Not only should such a claim be unavailing to GTCR in the circumstances of this case ­ the language of these agreements was chosen by GTCR and any ambiguity would be construed against it ­ but there is no evidence in the record on this Motion that these employment agreements were intended to address prior understandings, agreements, or relations between anybody other than the parties to the agreements themselves. D. Any Integration Clause Ambiguity Must Be Construed Against Defendants And Parol Evidence Is Admissible To Resolve The Ambiguity.

The law is clear in Illinois that any ambiguities present in any of the written contracts at issue here will be construed against the GTCR defendants, because they prepared these documents. "A contract will be construed most strongly against the party who prepared it, for the reason that he chose the words to be used and is therefore more responsible for the existence of the ambiguity." Ricke v. Ricke, 83 Ill. App. 3d 1115, 1118, 405 N.E.2d

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agreements between the parties to the employment agreements only, i.e., between plaintiffs and LeapSource. In addition, the integration clauses should be limited to "prior

understandings, agreements or representations by or among the parties to the agreement concerning the terms of said agreement[s]", i.e., regarding either employment (in the case of the SMA or Employment Agreements) or buying stock (in the case of the Stockholders Agreement).

7 8 9 10 11 12 13 14 15 16 17 interpretation of the ambiguous language is a question of fact that the court could not rule 18 19 20 21 22 23 24 25
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E.

Parol Evidence Cannot Resolve Any Ambiguity By Summary Judgment.

Following the Illinois "four corners rule" cited by the GTCR defendants, it is clear that if the Court finds that the language of the contract is susceptible to more than one meaning, an ambiguity is present. To assist the Court in resolving an ambiguity, parol evidence may be admitted. Air Safety, Inc. v. Teachers Realty Corp., 706 N.E.2d 882, 884 (Ill. 1999). However, in Quake Const., Inc. v. American Airlines, Inc., 141 Ill. 2d 281, 288-89, 565 N.E.2d 990 (1990), the Illinois Supreme Court held that if the language of an alleged contract is ambiguous and parol evidence is admitted to ascertain the parties intent, the

upon in a motion to dismiss. While Quake involved a motion to dismiss, the rule is equally applicable on a motion for summary judgment and for the same reason. Thus, if the Court determines that any of the integration clauses cited by GTCR are ambiguous, parol evidence should be admitted to determine the intent of the parties with regard to the subject of the ambiguity, and the resolution of that issue is inappropriate for determination on a motion for summary judgment.

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XIV. PLAINTIFFS' PROMISSORY ESTOPPEL CLAIM. GTCR argues that the plaintiffs cannot establish their reasonable reliance on the promises made to them by GTCR that induced them to leave Arthur Andersen on September 14, 1999, because some of those promises are inconsistent with written agreements that were not drafted or shown to the plaintiffs until after they had already left Andersen and burned that bridge behind them. Motion at 29-30. The fact is that GTCR made promises and representations to the plaintiffs to induce

8 9 10 11 12 13 14 15 16 17 unreasonable in light of the promises and representations that were made to them before they 18 19 20 21 22 23 24 25
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them to leave Andersen, and the plaintiffs believed GTCR and relied to their detriment by leaving Andersen in reliance on GTCR's promises and representations. GTCR now says it is "no answer" to their argument to say that the written agreements did not even exist at the time of the plaintiffs' reliance, but they can't explain why it is "no answer" to their argumen